He estimates the bank may lose $5 billion to $7 billion in regulatory capital this year if the dollar gains against the yen, euro and currencies in emerging markets, which provide about half the firm’s profit. That would be its worst translation loss in five years, exceeding the $3.5 billion deficit in 2011.

The average of 26 analysts polled by Bloomberg predicted Citigroup's stock would rise to $55.67 within this year, up about 7%.

But Peabody, famous for calling the mortgage market's crash as early as January 2005, says Citi's share price could drop by 50 percent, their book sapped by currency losses.

He told Bloomberg that the bank's reliance on revenue from abroad leads him to believe currency swings will hurt Citi more than other U.S. firms.

Last June, Peabody said Citigroup’s currency losses could reach $3 billion to $5 billion as the Mexican peso and the Brazilian real slumped against the dollar. The bank posted a $1.6 billion currency loss instead.

Now that "taper" is on the lips of every market watcher, the dollar is rallying and bond yields are through the roof. While accounting rules will mean currency losses wouldn't reduce Citigroup's reported income, their book value would suffer.